BRUSSELS/LONDON, May 18 (Reuters) - European officials areworking on contingency plans in case Greece bombs out of theeuro zone, the EU's trade commissioner said on Friday, asEuropean share prices tumbled and Germany warned of continuingfinancial turmoil.

German Finance Minister Wolfgang Schaeuble, one of Greece'sharsher critics, said market unrest fuelled by the euro zonedebt crisis could last another year or two. "Regarding thecrisis of confidence in the euro ... in 12 to 24 months we willsee a calming of the financial markets," he said.

Germany seemed to be increasing pressure on Athens whenGreece's government spokesman said that Chancellor Angela Merkelraised the idea of Greece holding a referendum on its eurozonemembership -- something Berlin promptly denied.

European shares hit their lowest level since December,depressed by the prospect of a Greek euro exit spreading a waveof contagion in the currency bloc which could engulf much largereconomies such as Spain's.

Policymakers insist they want Greece to remain in the eurozone but European Union trade commissioner Karel De Gucht saidthe European Commission and the European Central Bank wereworking on scenarios in case it has to leave.

"A year and a half ago there maybe was a risk of a dominoeffect," De Gucht told Belgium's Dutch-language newspaper DeStandaard.

"But today there are in the European Central Bank, as wellas in the Commission, services working on emergency scenarios ifGreece shouldn't make it. A Greek exit does not mean the end ofthe euro, as some claim."

Speculation about such planning has been rife, but deGucht's comments, which were confirmed by a person close to him, appeared to be the first time an EU official has acknowledgedthe existence of contingencies being drawn up .

A German finance ministry spokeswoman, asked about plans fora possible Greek exit, said without elaborating: "The Germangovernment naturally has the responsibility to its citizens tobe prepared for any eventuality."

But the European Commission's top economics official, OlliRehn, later dismissed De Gucht's comments.

"Karl De Gucht is responsible for trade. I am responsiblefor financial and economic affairs and relations with theEuropean Central Bank." Rehn said. "We are not working on thescenario of a Greek exit. We are working on the basis of ascenario of Greece staying in."

A spokesman for the Commission, the EU's executive, alsowrote on Twitter there was no active planning.

Confusion increased when Greek government spokesman DimitrisTsiodras said that Merkel raised with the Greek president theidea of Greece holding a referendum on its euro zone membershipnext month, together with national elections.

Tsiodras's statements evoked memories of a bitter rowbetween Athens and the EU last year, when Greece's then PrimeMinister George Papandreou proposed a referendum on thecountry's bailout deal -- an idea the EU vehemently rejected,helping accelerate the downfall of Papandreou's government.

Greek political leaders on Friday angrily rejected areferendum and a German government spokesman denied that Merkelever proposed it. "This is false and we completely dismissthis," the spokesman told Reuters.

World shares slid and German borrowing costs hit record lowsas uncertainty about Greece's future in the euro zone and adeepening Spanish banking crisis bolstered safe-haven assets.

Investors were rattled by a ratings downgrade of 16 Spanishbanks by Moody's Investors Service, although the move had beenexpected.

Sentiment has soured to such an extent that an opinion pollshowing Greeks are returning to establishment parties whichsupport the country's bailout had little impact.

If they vote that way in June 17 elections, Greece's placein the euro zone would look more secure and the threat ofcontagion to countries such as Spain would diminish.

The poll, the first conducted since talks to form agovernment collapsed and a new election was called, showed theconservative New Democracy party in first place, several pointsahead of the radical leftist SYRIZA which has pledged to tear upits 130 billion euro bailout programme.

"It's up to Greek politicians to explain the reality totheir people and not make false promises," Schaeuble toldFrance's Europe 1 radio. "We want Greece to stay in the euro butmeet its commitments and that's a decision that's up to theGreeks."